403(b) RMD Rules: Pre-1987 Exemption, Aggregation, and What TIAA Participants Need to Know

If you've spent your career at a school, hospital, university, or nonprofit, your retirement savings are likely in a 403(b) plan — a tax-sheltered annuity that shares the same basic framework as a 401(k) but operates under different RMD rules. The differences matter: 403(b) plans have a unique pre-1987 balance exemption that has no equivalent in IRAs or 401(k)s, their own aggregation pool, and specific constraints around qualified charitable distributions. Here's what teachers, hospital employees, university faculty, and nonprofit workers need to know.

Who holds 403(b) plans

403(b) plans — also called tax-sheltered annuities (TSAs) — are employer-sponsored retirement plans available to:

• Public school teachers (K-12, including teachers in states with strong pension plans who also accumulated supplemental 403(b) savings)
• Hospital and healthcare system employees (non-profit hospitals, health systems, and affiliated medical groups)
• University faculty and staff — the most common plan type at research universities; TIAA-CREF contracts are nearly universal here
• Nonprofit organization employees (501(c)(3) organizations of all sizes)
• Ministers and church workers (church plans exempt from ERISA may have additional rules)

Unlike 401(k) plans (governed by ERISA's strict uniformity requirements), 403(b) plans have accumulated decades of grandfathered rules — most importantly, the pre-1987 balance exemption below.

RMD starting age: same as IRA and 401(k)

The SECURE 2.0 Act § 107 raised the RMD starting age and this applies uniformly to 403(b) plans:¹

The first-year April 1 deadline applies to 403(b)s just as it does to IRAs. Taking the first-year distribution in the year you turn 73 (rather than deferring to April 1) avoids the double-distribution trap — two full RMDs in a single tax year. See our RMD starting age guide for the full birth-year table and timing considerations.

The pre-1987 balance exemption: 403(b)'s unique rule

This is the most significant difference between 403(b) plans and every other retirement account type. Contributions made to a 403(b) contract before January 1, 1987 — plus all earnings attributable to those pre-1987 contributions — are not subject to the standard age-73 RMD schedule.²

Who this actually helps: Employees who began contributing to a 403(b) before 1987 and remained at institutions that maintained separate pre-1987 balance accounting. This is most likely to apply to veteran teachers, long-tenure university faculty, and longtime hospital employees — people hired in the early-to-mid 1980s who've been at the same institution for 40+ years. If you started work after 1987, or if your plan doesn't separately track pre-1987 amounts, the exemption doesn't apply.

For the 1960+ cohort (RMD age 75): The pre-1987 exemption provides no additional deferral — both the standard RMD age and the pre-1987 deadline land at age 75.

For the 1951–1959 cohort (RMD age 73): The pre-1987 exemption gives up to two additional years of deferral on that specific portion, potentially allowing continued tax-deferred growth before the mandatory distribution. In practice, the amount is usually modest relative to decades of post-1986 accumulation.

To find out if your plan separately tracks a pre-1987 balance, contact your plan administrator or review your plan's annual statement.

How to calculate your 403(b) RMD

The calculation method is identical to IRA RMDs:

1. Find your 403(b) account balance as of December 31 of the prior year.
2. Subtract any separately tracked pre-1987 balance (if your plan documents it).
3. Divide the result by your IRS Uniform Lifetime Table divisor for your current age.

If your spouse is the sole beneficiary and more than 10 years younger, use IRS Table II (Joint Life and Last Survivor) instead of the Uniform Lifetime Table — this produces a smaller divisor and therefore a smaller RMD. The same spousal exception that applies to IRAs applies to 403(b)s. See our spousal RMD strategy guide.

Use our RMD Calculator to see this year's required amount plus a 10-year projection.

Aggregation: 403(b)s have their own pool

403(b) accounts can be aggregated — but only with other 403(b) accounts, not with IRAs or 401(k)s.³

This means if you hold 403(b) accounts at TIAA, Fidelity, and a former employer's mutual fund platform, you calculate the RMD for each account separately, then take the combined total from whichever account you choose — say, the one with the most liquid assets or the least favorable investment options. But you cannot use your IRA to satisfy the 403(b) requirement, or vice versa.

Common mistake for multi-account retirees: A retired professor with both a TIAA 403(b) ($800,000) and a traditional IRA rollover ($400,000) takes only from the IRA, assuming IRAs and 403(b)s are interchangeable. They're not. The 403(b) RMD is unsatisfied — a 25% penalty on the shortfall.

The still-working exception: delay 403(b) RMDs if you're still employed

Like 401(k) plans, 403(b) plans offer the still-working exception: if you are still employed at the organization sponsoring the plan and own less than 5% of the organization, you can delay RMDs from that specific plan until the year you actually retire.⁴

Important: this does NOT defer IRA RMDs. A university professor still teaching at 75 can delay the university's 403(b) RMD — but if they rolled an old 403(b) or 401(k) into a traditional IRA, the IRA RMD begins at age 73 or 75 regardless of employment. Only the current employer's plan gets the delay.

This exception is particularly valuable for veteran educators who plan to teach into their mid-to-late 70s and have significant 403(b) accumulation at their current school or university.

Roth 403(b): no lifetime RMDs since 2024

Starting January 1, 2024, Roth 403(b) accounts joined Roth IRAs in having no lifetime required minimum distributions. SECURE 2.0 Act § 325 eliminated the previous requirement that Roth employer plan balances (401(k), 403(b), TSP) take RMDs.¹

If you have been directing 403(b) contributions to a Roth 403(b) account, you are not required to take distributions from it during your lifetime. The balance can grow tax-free indefinitely. Beneficiaries who inherit a Roth 403(b) will be subject to the 10-year rule (same as inherited Roth IRA), but there are no annual distribution requirements during the beneficiary's 10-year period.

Prior to 2024, many Roth 403(b) holders would roll the balance to a Roth IRA before age 73 specifically to avoid lifetime RMDs. That workaround is no longer necessary — you can leave Roth 403(b) balances in the plan, though rolling to a Roth IRA may still make sense for investment flexibility and estate planning reasons.

TIAA and annuitized 403(b) contracts

TIAA (Teachers Insurance and Annuity Association) is the dominant plan provider for university 403(b) plans, and many longtime participants hold their accumulation in the TIAA Traditional annuity — a fixed-rate contract that can only be distributed in specific ways, including annuity income streams.

How RMDs work from annuitized TIAA contracts:

• Once a TIAA contract is "annuitized" — meaning it has been converted to an income stream (monthly payments for life, joint and survivor, or for a fixed period) — the annuity payments themselves constitute the RMD.
• You do not separately calculate and take an RMD from an annuitized contract; the stream of annuity income satisfies the distribution requirement as long as it meets the IRC §401(a)(9) minimums.
• Non-annuitized TIAA accounts (accumulation-phase contracts, CREF variable annuity accounts, and mutual fund accounts held in a TIAA 403(b)) follow the standard RMD calculation and aggregation rules.

University employees with TIAA Traditional contracts should confirm with TIAA whether their contract is in accumulation or annuity phase — and what the annuity election options are — before the RMD age. TIAA Traditional's liquidity restrictions mean decisions about annuitization vs. transfer to the TIAA Real Estate or CREF accounts can have irreversible consequences.

QCDs from 403(b)s: not available — roll to IRA first

This is one of the most consequential differences between 403(b) plans and IRAs for charitable retirees.

Qualified Charitable Distributions (QCDs) can only be made from individual retirement arrangements (IRAs) — traditional, Roth, SEP, and SIMPLE IRAs. IRC § 408(d)(8) defines QCDs as distributions from an "individual retirement plan," which does not include employer-sponsored plans like 403(b)s, 401(k)s, or 403(a)s.⁵

If you want to use the QCD strategy to exclude charitable giving from income (up to $111,000 in 2026) and count it toward your RMD, you must first roll the 403(b) balance to a traditional IRA. Once in the IRA, QCDs become available in the year you reach age 70½.

Rollover timing matters: You cannot do a QCD from a distribution you've already received. The distribution must go directly from the IRA to the qualified charity. And you cannot roll a 403(b) RMD directly to an IRA — RMD amounts are not eligible for rollover. Plan the timing: complete the 403(b)-to-IRA rollover before the RMD age if you want QCD flexibility. See our QCD strategy guide for how this works.

Inherited 403(b): the 10-year rule applies

Non-spouse beneficiaries who inherit a 403(b) account after December 31, 2019 are subject to the SECURE Act 10-year rule: the inherited account must be fully distributed by December 31 of the 10th year after the year of death.

Under T.D. 10001 (finalized July 2024), if the original account owner had already reached their Required Beginning Date (RBD) and was taking RMDs, the beneficiary must also take annual RMDs in years 1–9, with the full balance distributed by year 10.⁵

The annual distribution rules for inherited 403(b)s follow the Single Life Expectancy Table (not the Uniform Lifetime Table). For inherited 403(b)s, you cannot aggregate with your own 403(b)s or IRAs — they're a separate pool.

Eligible Designated Beneficiaries (EDBs) — surviving spouses, minor children of the decedent, disabled individuals, chronically ill individuals, and beneficiaries not more than 10 years younger than the decedent — retain the stretch distribution option and are not subject to the 10-year rule. See our beneficiary designation guide for the full EDB rules.

403(b) vs. IRA vs. 401(k): side-by-side comparison

Should you roll your 403(b) to a traditional IRA before RMD age?

For most 403(b) participants, rolling to a traditional IRA before the RMD age simplifies the distribution picture and unlocks QCD access. But the decision isn't automatic — here are the key considerations:

Reasons to roll 403(b) to IRA:

• QCDs become available. If you're charitably inclined, rolling to an IRA opens up to $111,000/year in tax-free charitable giving that directly offsets your RMD. This alone can justify the rollover for retirees with significant charitable intent.
• Aggregation with existing IRAs. Rolling a 403(b) to a traditional IRA merges it into your IRA aggregation pool, simplifying to a single annual distribution decision.
• Investment options. IRAs at major custodians offer broader investment menus than many employer-sponsored 403(b) plans, which sometimes carry high-expense-ratio proprietary products.
• Beneficiary flexibility. IRA beneficiary designations are updated at the custodian; employer plan beneficiary designations are controlled by the plan and may have restrictions.

Reasons to keep the 403(b) in place:

• Still-working exception. If you plan to remain employed past 73, keeping the 403(b) active with your current employer preserves the option to delay RMDs from that plan until retirement.
• Pre-1987 balance. If your plan separately tracks a pre-1987 balance and you're in the 1951–1959 birth cohort, rolling to an IRA forfeits the 2-year deferral advantage on that portion.
• TIAA Traditional liquidity. TIAA Traditional contracts have unique payout options (including guaranteed fixed income) that may not be replicable in an IRA rollover. Annuitizing may provide valuable longevity insurance.
• Plan-level creditor protection. If you have significant creditor exposure, ERISA plan protection may exceed IRA protection in your state.

Timing: RMD amounts are not eligible for rollover — they must be distributed first. If you want to roll a 403(b) to an IRA, do it before the RMD age to avoid the complication of satisfying the final 403(b) RMD separately before rolling the remainder.

What an advisor models that you can't easily do alone

403(b) participants at the RMD threshold typically have a more complex distribution picture than IRA-only retirees. A specialist will:

• Determine whether your 403(b) plan separately tracks pre-1987 balances and quantify the deferral value
• Model the QCD opportunity: what's the 10-year present value of tax savings from rolling to IRA vs. keeping in the 403(b)?
• Analyze the TIAA Traditional annuity decision — monthly income vs. rollover flexibility vs. Roth conversion window
• Coordinate 403(b), IRA, and pension income streams to minimize Social Security taxation, IRMAA surcharges, and overall lifetime tax
• Set up the correct aggregation tracking to avoid the common mistake of taking only from an IRA while leaving the 403(b) RMD unsatisfied

For teachers and university employees with both a pension and a 403(b), the interaction of guaranteed income with RMD planning adds another layer — pension income may push you into higher brackets, making Roth conversions less attractive but QCDs more valuable. See our Roth conversion guide and IRMAA planning guide for how to think through these interactions.

Sources

1. IRS — Retirement Topics: Required Minimum Distributions (RMDs). SECURE 2.0 Act § 107: RMD age 73 for born 1951–1959; age 75 for born 1960+. SECURE 2.0 § 325: Roth 401(k)/403(b)/TSP no lifetime RMDs effective for tax years beginning after December 31, 2023.
2. IRS — Retirement Plan and IRA Required Minimum Distributions FAQs. Pre-1987 403(b) balance exemption: amounts attributable to pre-1987 contributions and earnings in a 403(b) are not required to be distributed until December 31 of the year the employee reaches age 75, or April 1 of the year following retirement if later; plan must separately track pre-1987 amounts.
3. IRS — RMD Comparison Chart: IRAs vs. Defined Contribution Plans. Aggregation rules: 403(b) accounts can be aggregated within the 403(b) category; cannot satisfy 403(b) RMDs from IRA accounts or vice versa; 401(k) plans require separate distributions from each plan.
4. IRS — Retirement Plan FAQs: Still-Working Exception. Participants in a 403(b) or 401(k) plan who are not 5%-or-more owners and are still employed at the sponsoring employer may delay RMDs from that plan until actual retirement; IRAs are not eligible for this exception.
5. IRS — IRA Required Minimum Distributions. IRC § 408(d)(8) QCD rules: qualified charitable distributions are available only from individual retirement arrangements (IRAs), not from employer-sponsored plans including 403(b) accounts; T.D. 10001 (July 2024): annual RMDs required for non-EDB beneficiaries under the 10-year rule when decedent had passed Required Beginning Date.

403(b) RMD rules and pre-1987 balance exemption verified against IRS FAQs and IRS RMD Comparison Chart, May 2026. SECURE 2.0 provisions effective per IRS guidance. Pre-1987 exemption applicability depends on plan document and administrator tracking — confirm with your plan before relying on this rule.